True picture of economy emerges in official data

In the wake of the information revolution, governments, too, are becoming savvy in the art of sophisticated media management that enables them to have their say in direct interaction with the people beyond the traditional print and TV media. However, such management also leads to the sowing of doubts in the minds of people as they struggle to sift real facts from managed news. Something similar may have happened in the case of the official Indian narrative about the economy.

The lockdown — the toughest in the world — had wiped out nearly 25 per cent of the country’s productivity, but there was no official admission. Government officials did not directly comment on the sorry state of economic affairs even though several agencies, including the Reserve Bank of India, had painted a grim economic scenario. The moment of truth may have come when the National Statistical Office ( NSO), a statistical body under the Union ministry of statistics and programme implementation, released its report on the economic outlook.

On Thursday, NSO projected a 7.7 per cent contraction for the Indian economy in 2020- 21, highlighting the damage that the coronavirus has inflicted on the Indian economy. Though the contraction has become slightly milder after September 2020, making many analysts suggest a V- shaped recovery, the real picture has not become any better.

According to NSO data, the business of services like trade, hotels, transport, communication and broadcast is expected shrink by 21.4 per cent, construction sector which has a multiplier effect on other industries is expected to shrink by 12.6 per cent, mining and quarrying are projected to witness a degrowth of 12.4 per cent, and manufacturing is projected to lose productivity by 9.4 per cent. When such key segments of the economy are witnessing a degrowth, the economy can never be said to be in pink of its health. The impact of such widespread deceleration in the economy is evident in unemployment that has been left unaddressed for a long time.

In a recent report, the Centre for Monitoring Indian Economy ( CMIE) said the unemployment rate in the country rose sharply to 9.1 per cent in December 2020, which is the highest since the beginning of India’s recovery from the lockdown in June. The jobless rate stood at 10.99 per cent in June 2020. Unemployment in urban India rose from 7.1 per cent to 8.8 per cent.

While there is an improvement in hiring intentions in some sectors, a survey conducted by Manpower Group claims that it would take at least nine months for the country to reach pre- Covid levels. This scenario presents a tightrope walk for the government, as jobs will not increase unless economic output rises. Higher economic output and consumer confidence, however, are mutually dependent. People will not splurge unless they are confident about their financial future, which once again depends on the country’s economic growth. Therefore, the role of the government and rich corporations assumes greater significance to spur economic growth of the country.

This scenario presents a tightrope walk for the government, as jobs will not increase unless economic output rises